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CUNA Asking for Feedback on MBL Proposal Questions
Tuesday, August 4, 2015 6:40 AM

The National Credit Union Administration's Member Business Lending Proposal is open for comment through the end of August, and many bankers are busy sending a flood of letters in response. Credit Union National Association reports that the proposed rule would completely overhaul NCUA's MBL regulation, and credit unions will be affected.

In its Aug. 3 Advocacy Update, CUNA Chief Advocacy Officer Ryan Donovan writes, "Almost all requirements not in the Federal Credit Union Act would be removed. The proposal would create a category of 'commercial' loans for safety and soundness purposes and utilizes the category of MBLs for compliance with the Act's limitations on member business lending."

Donovan goes on to lay out some of the issues. "[T]he Act does not categorize any nonmember participations as MBLs and neither does the proposed rule. However, business loan participations are considered commercial loans for the purposes of safety and soundness," Donovan says. "The rule would remove all of the specific requirements that currently require waivers, including the personal guarantee requirement. It would also exempt some CUs with less than $250 million in assets from the board of director and management responsibility requirements and commercial loan policy requirements. The proposal has an 18-month implementation period."

As a result, CUNA is asking for feedback on the following questions:

  1. Do you believe that the switch from a prescriptive rule to a principle-based rule will provide you more flexibility in making business loans? Why or Why not?
  2. Will the adjustments in the calculations of loans that count for the MBL statutory cap assist your credit union in making more MBLs?
  3. Does the proposed rule provide you with sufficient clarity to know what will be required in your policies/procedures? How will the proposed rule affect your current lending practices/policies?
  4. Are you comfortable that your examiner will be able to examine your portfolio and policies utilizing a principle-based rule?
  5. Does the removal of the waiver process benefit your MBL program?
  6. Does the distinction between commercial loans and member business loans benefit your MBL program?
  7. Will your credit union need to create a credit risk rating system or credit grading system in order to comply with the proposed rule?

Send your questions by email or comment on the proposal using PowerComment. While this isn't a contest between bankers and CUs where whomever gets the most letters in wins, it is important that well-developed comments are submitted to the agency.